News Releases

Citadel Capital Managing Director and AVCA Board Member Karim Sadek makes the case for non-traditional funding models as the best vehicle for capturing opportunity, maximizing profits and driving growth on the African continent

Tuesday, April 9, 2013

The panel consisted of Investors and leading private equity veterans with extensive experience in alternative approaches to fundraising and deal management that are well suited to frontier markets like Africa.

“Standard blind institutional funds are not necessarily the end-all, be-all of private equity particularly in African markets where many of the most exciting opportunities be it in Egypt, Kenya or Algeria, are not businesses that lend themselves to a short three-five year holding period,” said Citadel Capital Managing Director Karim Sadek.

“Citadel Capital has never been a traditional private equity firm. We have always utilized what we called opportunity-specific, deal-by-deal funds or industry funds rather than general or blind pools of funds. As the firm grew, we evolved into a capital-intensive deal-by-deal private equity investor investing in our own funds. Three years ago we listed on the Cairo Stock Exchange, becoming a listed, asset-heavy asset manager and today we are in the process of completing what we see as a natural evolution from an asset manager into a long-term principle investor investing in African resources and infrastructure,” explained Sadek.

Citadel Capital is currently in the process of a strategic transformation from a private equity firm into a regional investment holding company that controls 10 focus platforms in five core industries, including energy, transportation and logistics, agriculture and consumer foods, mining, and cement and construction.

As an investment holding company Citadel Capital is focused on a specific set of sectors and themes within its core African geography primarily in North and East Africa. The new holding company structure allows Citadel Capital to pursue longer-term strategies where it can add greater value.

“Our focus is now on taking a much longer 10-15 year view on opportunities versus the traditional 3-5 year private equity view,” said Sadek. “We will continue to invest in high-growth frontier markets in the region where barriers to entry are greatest and therefore a first mover advantage and the strong teams that we have in place are important assets that we can leverage.”

“For example, if you take a look at our investments in the transportation and logistics sector — whether its rail in Kenya and Uganda or river transport in Egypt and Sudan — these are businesses that we are painstakingly building, where we’re seeing massive year-on-year growth. From our perspective, having to exit those investments 3-5 years after we entered and started building simply does not make sense. We’re finding that many of the most exciting opportunities we’re pursuing and the greatest businesses that we own need a longer holding period in order to develop into real regional platforms with scale,” said Sadek.

Citadel Capital’s African investments include Rift Valley Railways (RVR), the national railway of Kenya and Uganda. As the operator of RVR, Citadel Capital and its co-investors are implementing a turnaround program which includes an upgrade of operational systems, a rehabilitation of existing assets and the addition of new assets to the fleet.

“For us investing in the African transportation and logistics sector is ultimately an opportunity to provide the market with cheap and reliable logistics solutions. In a world where energy is expensive focusing on efficiency via river or rail is a huge competitive advantage. We want to be an enabler of the growth in countries such Egypt, Sudan, Kenya and Uganda,” said Sadek.

In April 2012 Sadek was appointed to the board of AVCA to coincide with the association’s re-launch as a champion for the African private equity industry. As a representative of Citadel Capital, a firm renowned for having executed some of Africa’s most groundbreaking deals, Sadek has been a valuable addition to AVCA’s board.